The Pattern Great Companies Follow

I actually don’t think anyone can just start a company the way that a lot of technology publications have made it seem over the last several years. While the access to the so called “raw materials” may be easier, with cloud storage space getting cheaper by the month and access to technical resources being relatively available, it’s not really enough to say that this has made things easier. Lowering the barrier to entry to starting companies is great, but I’d encourage us to think of things a bit differently.

Starting successful companies is never easy, but when you’re willing to take a measured approach to experimenting and proving your concepts out in the real world, it gets easier.

Let’s start with the three examples of AirBnB, Uber and Facebook.

There have been plenty of posts written on the founding of each of these companies and you look at their founding stories objectively, you notice that a pattern emerges among them in terms of how they found their beginnings.

AirBnB, started with three beds at a design conference searching for a way to pay rent. Uber gave an iPhone app to their friends to see if they would actually call black cars (Min 38). Facebook launched a Harvard version of “hot or not” using publicly available directory info.

None of these companies attempted to build a massive consumer app from day 1, or hire thousands of cars or acquire dozens of rooms. Each of these companies started with a small, easily built and easily obtainable objective. Can I book 3 rooms at a conference? Will my friends actually call me to pick them up in a black car via an app? Do my friends really care that much about seeing each other on the internet? They validated assumptions behind ideas they had with lean experimentation, and from there each was able to iterate into much larger visions. They were committed to building something bigger than themselves, and thus were willing to start small in order to understand their problem, learn from their tests and grow as companies.

So, I have this idea for a company.

We all want to impact the world in some capacity, whether it be changing something within our local community or attempting to fundamentally change the way the world operates through a high growth startup like an AirBnB, Facebook or Uber. Many of us have even had ideas about how we would do that, but the question ultimately becomes “how do we get started?”

A couple of years ago, I had this idea that I wanted to help declined applicants for student loans while I was at LendKey Technologies. While working at LendKey, I would find myself frustrated with the degree to which we would decline hundreds of borrowers due to low credit scores each month. We would not only pay to attract these customers, but by declining them we would negatively impact their credit score and leave them with little to no recourse as to how to obtain the financing they needed. The declined applicant is given a legal notice, which doesn’t explain in plain english as to why they got declined and then sent on their way. This isn’t unique to LendKey (who operate on behalf of over 300 lenders), this is the way that financial services has essentially evolved. It just seems backwards to me, both parties are losing in this equation.

My idea, what if we could analyze credit reports to tell borrowers exactly why they were ineligible, provide them actionable recourse to improve their credit reports, and alert them when they became eligible for the financial products they needed. We’re calling it Bloom Credit.

How are we starting it?

With the help of the awesome people over at Nextt, an accelerator for launching ideas, we figured out some things we needed to validate in order to determine how we would shape Bloom Credit. Would consumers be interested in this service? Could we actually get enough consumers to opt in to make it worthwhile to lending partners? Would enough consumer’s credit “graduate” to the point of eligibility? If so, how would they graduate?

We launched a bunch of experiments, and here’s what we’ve found.

• We proved we could drive traffic to lean consumer brands about rehabbing credit for less than 10 cents a click — validating consumer interest in the concept
• We proved that consumers in our target market (credit scores below 600) would opt into this service at a 47% rate.
• We spoke with legal counsel in regards to the regulatory frameworks a service like Bloom Credit could operate in.
• We analyze historical fico rates and credit rehab reports, to see that secured credit cards and credit builder loans could help consumers obtain good credit, faster.
• We spoke with half a dozen financial institutions (and ongoing still =)) about the needs that this product would solve for their consumers, and how we could work with them to ensure consumers more efficient access.

Essentially, we’ve taken the steps by which we can prove to ourselves that there’s a legitimate need for rehabbing consumer credit in a way that helps financial institutions both retain customers they’ve worked hard to acquire, while helping consumers access the financial products they need.

Why this “lean experimentation” mindset is important?

There’s no such thing as an overnight success. Within all of the broad sweeping cultural events that pop up in 2016, all of them consistently require years of work and constant iteration. Hamilton, a show that is showing signs of being the biggest hit in broadway history took nearly a decade to develop. Pokemon Go, an app that took off to have mass popularity within days, started as a game called Ingress first. Nothing in life just takes off without serious consideration and planning first. People with big visions often fine tune and iterate to the point where things can hit mass adoption. It’s a process, more so than it is an event.

Dreaming big for an idea is fantastic, and should always be the basis by which you set your vision. Just always worth noting, big dreams can be tested.

You can learn more about my early journey with Bloom in this video.

And follow along with our progress at bloomcred.it.